The UK’s Financial Services Authority has provided temporary approval to all clearing houses to operate as qualified central counterparties (QCCPs) under Basel III, while it transitions to the new rules.

As per Basel III rules – the latest set of guidelines to ensure banks are adequately capitalised – designated QCCPs will have to comply with the principles for financial markets infrastructure developed jointly by the Committee on Payments and Settlements Systems (CPSS) and the International Organization of Securities Commissions (IOSCO).

The Basel Committee on Banking Supervision clarified that during 2013, if regulators have not yet applied the CPSS-IOSCO principles but are working towards this end, they will still be able treat clearing houses as QCCPs for a transitional period that expires on 31 December 2013.

Under the Basel III rules, QCCPs need to hold assets that equal 2% of each bank member’s trading exposures. Non-QCCPs would need to hold assets based on their credit ratings.

The UK watchdog added that it was focused on preparing CCPs for compliance with the European market infrastructure regulation, the region’s reform package for OTC derivatives trading. EMIR also requires the European Securities and Markets Authority to base its technical work on the CPSS-IOSCO principles.

In the UK, responsibility for CCPs will pass to the Bank of England from 1 April 2013.